Your Money Matters
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YOUNG MONEY YOUNG formerly pfeg YOUR YOUR MONEY YOUR MONEY MATTERS MATTERS y-m.org.uk Your Money Matters: Acknowledgments Young Money would like to take this opportunity Published by Young Money to thank Martin Lewis OBE, Founder of (part of Young Enterprise) MoneySavingExpert.com, for his generous donation, Young Enterprise Head Office direction and passion that made this project possible. Yeoman House Sekforde St Young Money would also like to thank the teachers London and consultants who guided the development of EC1R 0HF Your Money Matters and the Department of Education for their help and guidance in the development of Young Enterprise is a registered charity. this textbook. Registered number 313697 In addition, special thanks to: © 2018 Young Money Contributing authors ISBN 978-1-9164672-1-7 John Chapman All rights reserved. This book or any portion Stewart Jones thereof may not be reproduced or used in any Emma Waller manner whatsoever without the express written Russell Winnard, Young Money permission of the Publisher. Liz Booth, Young Money Printed in the United Kingdom by Geoff Neal Group. Other contributors British Library Cataloguing in Publication Data Robyn Vernon-Harcourt, Young Money A Catalogue record for this publication is available Eileen Gannon, Young Money from the British Library. Feyi Onamusi, Young Money Charlotte Churchill, Young Money Braden Clamp, Young Money Design by Something Big Ltd. Printed by Geoff Neal Group Proofread by Melissa Stewart Quality Mark by Young Money ENSURE YOU’RE IN THE KNOWS, NOT IN THE KNOW NOTS. Foreword by Martin Lewis aka the Money Saving Expert It’s only money isn’t it? Well, no, actually. It’s far more important than that. I’ve spent 15 years campaigning on TV and online to get people to be better with their cash. Money isn’t just a financial issue, problems can infect every area of your life – your happiness, mental health, work, relationships and more. This isn’t intended to scare you, I just don’t intend to sugar coat it just because you’re still at school. Of course, you likely already make money choices on a daily basis – such as picking your phone or buying a friend’s birthday present – and as you move into independence the decisions grow, whether you dream of getting a car, want to go to Uni, or getting your first job. Throughout all of these, the knowledge and attitudes you have about money will become even more important. That’s what this textbook is about. It’s here to start you out on your journey towards financial literacy. While it won’t come close to teaching you all the answers you’ll need for life, it does cover many of the main ones. Yet even if all you picked up was to take money seriously, to read up and ask questions before big decisions, and gain the skills to do the numbers, it would leave me skipping like a little lamb (not a pleasant image I accept). While some of your parents and guardians will be great with money – some won’t – and it’s important we level the playing field. That’s one reason I, and many others, campaigned for years to ensure we got financial education on the curriculum. Yet that alone isn’t enough. We live in one of the world’s most competitive economies, companies spend billions advertising, marketing and teaching their staff to sell, yet we don’t get any buyers training. That needs to change. This textbook aims to make it easier for schools to ensure that every young person receives a high-quality financial education by the time they leave school. I hope you like it. Martin Lewis Young Money is very grateful to Martin Lewis OBE for funding the development and delivery of this textbook into every English state secondary school. Statement from The Rt Hon Nick Gibb MP: Economic and financial education are an important part of a broad and balanced curriculum, and provide the essential knowledge that young people need to manage their finances and succeed in the modern world. Both the Department for Education and HM Treasury support high-quality resources for schools to help deliver this, and I would like to commend Martin Lewis and Young Money for making this new textbook available. Minister of State for School Standards, the Rt Hon Nick Gibb MP Statement from Michael Mercieca, CEO of Young Money, which is part of the charity Young Enterprise: It’s an increasingly complex world out there for young people, with a huge range of financial decisions that need to be taken from an early age, in the face of ever-increasing technological change in the financial landscape. This textbook aims to help you get to grips with these money choices, which have such an important impact on your future. We couldn’t have produced this textbook without Martin Lewis OBE, who funded its development and delivery, and we’re extremely grateful for his support. I very much hope that this textbook goes a long way to helping you prepare for your financial future. Michael Mercieca, CEO of Young Money, which is part of the charity Young Enterprise YOUR MONEY MATTERS About Young Money Young Money (formerly pfeg), supports all educators in developing the financial capability of the young people they work with. We are a trusted and valued provider of knowledge, resources and training to anyone teaching children and young people how to manage money. We offer schools free resources and support to make teaching financial education easy. We know that every school and college is unique and needs to find its’ own solution to meeting the needs of its’ learners. We believe that trained teachers provide the most effective and sustainable route for financial education in schools as they know their pupils best and understand how to integrate financial education into lessons and meet the requirements of their school curriculum. Please visit us at www.young-money.org.uk to get ideas, inspiration, advice and to access our full range of resources and services. Contact Young Enterprise Head Office Yeoman House Sekforde St London EC1R 0HF T. 020 7330 9470 E. [email protected] Follow us on twitter @YoungMoneyEdu Young Enterprise is a registered charity. Registered number 313697 Incorporated in England as a Company Limited by Guarantee No. 712260 YOUR MONEY MATTERS YOUR MONEY MATTERS CONTENTS 9 HOW TO USE THIS MOVING ON FROM 121 SECURITY & FRAUD TEXTBOOK SCHOOL – THE WORLD 122 What is fraud? 75 OF WORK 123 Identity theft 11 SAVING 76 Next steps: apprenticeship 125 Key terms 12 Savings 76 Next steps: employment 126 Fake emails 15 Interest 78 Next steps: university 127 Online fraud 20 Savings accounts 79 Student finance 131 How to protect yourself 24 Ways to save 81 Earnings 132 Online security 28 Money and mental health 82 Payslips 134 Help available 29 What have you learnt? 84 Tax and National Insurance 136 Money mules 30 Further your knowledge 87 Self-employed 137 What have you learnt? 88 Methods of payment 138 Further your knowledge MAKING THE MOST 89 Why do we pay Income Tax? 33 OF YOUR MONEY 91 Pensions 141 GLOSSARY 34 Spending 94 Help for people on low incomes 38 Ways to pay 95 What have you learnt? 40 Budgeting 96 Further your knowledge 43 Keeping track of your budget 45 Value for money 48 Know your rights 99 RISK & REWARD 49 What have you learnt? 100 Types of personal financial risk 50 Further your knowledge 102 Attitudes to risk 103 Assessing risk 53 BORROWING 104 Investments 54 Borrowing and debt 106 Gambling 56 Repayment, interest and APR 110 Protecting yourself 60 Making informed choices 112 Types of insurance 62 Borrowing products 115 Other forms of protection 70 Manageable and against financial risk unmanageable debt 117 What have you learnt? 71 What have you learnt? 118 Further your knowledge 72 Further your knowledge 8 YOUR MONEY MATTERS HOW TO USE THIS TEXTBOOK Welcome to Your Money Matters. This book will help you make informed choice about managing your money, now and in the future. There are six chapters on topics that are relevant to you. Each starts with a question, which the information included in the chapter will help you answer. In each chapter, you will find: INFORMATION WHAT HAVE YOU LEARNT? The information icon highlights key and Each chapter reviews learning with a ‘What have you useful information on the chapter topic. learnt?’ section, which include summary activities and case studies for you to complete, drawing on the DID YOU KNOW? knowledge you have gained throughout the chapter. Look out for the these icons, which will give interesting facts on the subject area. FURTHER YOUR KNOWLEDGE At the end of each chapter, there is an additional section ACTIVITY which includes further and more detailed information The pencil icon indicates there is an about the subject area, and extension activities to stretch activity for you to complete to help build your learning. your knowledge and understanding of the information you have read. DISCUSSION The discussions provide an opportunity for to you talk to your classmates about the topic areas and give your opinion on key information within the chapter. CASE STUDY The case studies let you examine real-life situations in more detail and decide what you think the best course of action is. QUESTIONS You will find questions at the end of each section. The questions are an opportunity for you to apply the knowledge you have gained through reading the information and check your understanding. 9 YOUR MONEY MATTERS YOUR MONEY MATTERS 10 SAVING SAVING IS IT IMPORTANT FOR ME TO SAVE MY MONEY? In this chapter you will explore the reasons that people save money, and how to compare the range of saving options available.